|
|
- Info
The behavior of nonindustrial private forest landowners
| Author: |
Hyberg, B.T.; Holthausen, D.M. |
| Date: |
1989 |
| Periodical: |
Canadian Journal of Forest Resources |
| Abstract: |
Recent models of nonindustrial private forest landowner behavior have suggested that landowners seek nonmonetary as well as monetary returns from their forest investments. In this paper, landowners are modeled as maximizing utility, which is a function of income and nonpecuniary benefits. We explore the implications of this model for both harvesting and reforestation decisions, present empirical evidence that supports the model, and discuss some policy implications of the model. NIPF landowners have usually been modeled as profit maximizing in nature. In this paper, we have presented a model in which NIPF landowners maximize utility that is a function of income and nonpecuniary benefits from forest investments. This approach appears to be more consistent with observed NIPF landowner behavior than the profit maximizing framework. Major implications of the model are that utility maximizing NIPF landowners will invest a larger amount of capital in reforestation and grow their timber using longer rotations than would profit-maximizing landowners. These conclusions are a direct result of the hypothesized consumption of nonmarket amenities flowing from increasingly older stands of landowners' timber. The longer rotations predicted by the utility-maximization model conform well with observed NIPF behavior. It has often been noted that NIPF landowners harvest their lands less frequently than is economically optimal. On the other hand, the prediction of greater NIPF capital investment in forest management cannot be easily confirmed because the confirmation requires information on each individual's financial opportunities. We have, however, provided some empirical support for the model by showing that NIPF landowners tend to reforest harvested land more frequently as exogenous income rises. The utility-maximization model provides economic explanations for a number of socioeconomic trends that have been observed in forest management (Yoho and James 1958; Webster and Stoltenberg 1959; Straka et al. 1984; Boyd 1984; and others). These trends, such as increasing capital investment with increasing wealth and ambiguous stumpage price effects, have not been satisfactorily explained within a profit-maximizing model. The formulation of effective public policy depends on an accurate depiction of the behavior of economic agents. The choice of the appropriate form of timber taxation, the provision of forestry extension services, and the implementation of cost-share programs all have been the subject of numerous studies. Our analysis indicates that the selection of an appropriate model of behavior is no less important than the selection of an appropriate policy, because the choice of the optimal policy depends on the use of the correct behavioral model. We have shown that programs designed to increase timber supply of profit-maximizing landowners may actually result in a reduction of supply from utility maximizing landowners. In addition, funds used to support these programs may end up subsidizing the private consumption of nonmarket forest amenities by NIPF landowners. |
|
